Oil markets moved slightly lower on Tuesday in a session marked by lighter volumes and concentrated attention on diplomatic talks between the United States and Iran. A stronger U.S. dollar and anticipation of a series of U.S. economic reports and Federal Reserve signals also weighed on crude prices.
Price moves
Brent futures for April retreated 0.3% to $68.45 a barrel. By 21:00 ET (02:00 GMT), West Texas Intermediate futures were quoted at $63.45 a barrel, up 1.1% on the day; market participants noted that the move in WTI was skewed by a U.S. holiday on Monday.
Thin liquidity
Trading activity was notably subdued as holidays in several Asian markets limited participation. Exchanges were closed or operating with reduced hours in China, Hong Kong, Taiwan, South Korea, and Singapore, curbing volumes and contributing to a quieter market tone.
Diplomatic focus - U.S.-Iran dialogue
Ministers from the U.S. and Iran were scheduled to meet in Geneva, Switzerland, to discuss Iran's nuclear enrichment program, according to media reports. U.S. President Donald Trump told reporters on Monday that he would be "indirectly involved" in the discussions, though the precise nature of that involvement was not specified.
The Geneva engagement follows a round of talks earlier this month that were described as largely inconclusive. Media reports indicated that the U.S. had deployed a second aircraft carrier to the Middle East ahead of the discussions and that Washington was planning an extended military campaign in the region if talks failed to make progress. Those developments have led markets to build in a higher risk premium for crude on the prospect of deteriorating geopolitical conditions that could threaten supplies.
Macro backdrop - dollar and U.S. data
The dollar strengthened modestly on Tuesday, rising 0.2% against a basket of currencies. That firmer dollar dynamic weighed on dollar-denominated commodities, including crude, by making them relatively more expensive for holders of other currencies.
Attention this week is focused on a series of U.S. economic indicators, including industrial production and trade figures, and most importantly the Personal Consumption Expenditures (PCE) price index. The PCE index is the Federal Reserve's preferred inflation measure and is likely to be an important input into the central bank's thinking on interest rates. Additionally, the minutes from the Fed's January meeting are due this week and could provide further clarity on monetary policy intentions.
Market implications
With geopolitical developments and central bank cues in close view, market participants are balancing near-term supply risk against demand signals from the U.S. economic calendar. The current environment of lower liquidity and heightened headline sensitivity leaves prices vulnerable to sharper moves should any of the variables shift materially.
Reporting on market prices, diplomatic meetings, and scheduled economic releases as described above.